BMO Capital Less Sanguine on Apple (AAPL) Following Mobile World Congress; 'Absolutely' Needs Larger Screen iPhone

March 1, 2013 7:56 AM EST
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BMO Capital analyst Keith Bachman said he came away from the Mobile World Congress modestly more negative on Apple (NASDAQ: AAPL) after speaking with carriers that serve Europe, Latin America, and the Middle East; and 2) a distributor that serves the Middle East.

"In aggregating the comments, people we spoke with mentioned that the iPhone 5 is a good device that gets interest, but is not materially different from the iPhone 4S," he said. "In particular, Samsung's products such as the Galaxy S3, seem to be generating much greater interest. Many thought that Apple needed a large screen size product." In one example, Bachman said store managers in Barcelona mentioned that Apple was getting much less interest than other handsets, and named Samsung as the most popular device.

The analyst said his estimate of 37.8 million iPhones in March, and 34.5 million in the June and 18 million iPads in March and 19 million in the June, are "reasonable" but he sees more downside tension than upside tension, particularly for iPhones.

On the dividend, he said this will be the next catalyst for the stock and expects an announcement to come on or before the next earnings call.

Bachman believes that Apple needs to move more aggressively into the mid-price
smartphone category. In addition, they "absolutely" believe the company needs to introduce a larger screen iPhone. "We think Apple needs to and will do both," he said.

The firm maintained their Outperform rating and $580 price target on Apple.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $441.40 yesterday.

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